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Say on pay: do shareholders care?

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  • Gerner-Beuerle, Carsten
  • Kirchmaier, Tom

Abstract

This paper examines the impact of enhanced executive remuneration disclosure rules under UK regulations introduced in 2013 on the voting pattern of shareholders. Based on a hand-collected dataset on the pay information disclosed by FTSE 100 companies, we establish that shareholders guide their vote by top line salary, and appear to disregard the remaining substantial body of information provided to them. Analyzing the unique British feature of two votes, one forward looking and one backward looking, we establish that shareholders differentiate between the two dimensions in about 23% of the cases. In contrast to the rationale of the legislation that introduced the two votes, however, differentiating voting behavior is not driven by characteristics of the executive's remuneration policy, but mainly by exceptionally positive future performance expectations.

Suggested Citation

  • Gerner-Beuerle, Carsten & Kirchmaier, Tom, 2016. "Say on pay: do shareholders care?," LSE Research Online Documents on Economics 118983, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:118983
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    File URL: http://eprints.lse.ac.uk/118983/
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    References listed on IDEAS

    as
    1. David F. Larcker & Allan L. McCall & Gaizka Ormazabal, 2015. "Outsourcing Shareholder Voting to Proxy Advisory Firms," Journal of Law and Economics, University of Chicago Press, vol. 58(1), pages 173-204.
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    5. Cai, Jie & Walkling, Ralph A., 2011. "Shareholders’ Say on Pay: Does It Create Value?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(2), pages 299-339, April.
    6. Vidhi Chhaochharia & Yaniv Grinstein, 2007. "Corporate Governance and Firm Value: The Impact of the 2002 Governance Rules," Journal of Finance, American Finance Association, vol. 62(4), pages 1789-1825, August.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    executive remuneration; say-on-pay; disclosure regulation; shareholder voting;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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